Gaming Signal: Console Price Drops?

Console Price Drops?

In the off chance you have been hiding under a rock or perhaps in a location without internet access, the Playstation 3 is going to recieve its first price drop sometime in the middle of July (Circuit City has an ad showing the price at $499 scheduled for July 15.) The rumor is that the details of this price drop will be revealed during E3 this coming week, and the folks over at GameDailyBiz have spoken to several retailers and it is looking like this will be a permanent sort of pricing change. Sony is still stating that currently there are no plans to cut the console's price. I think most gamers out there believe that this is the right move and while there are some who think that the PS3 is still overpriced and if they would just drop Blu-Ray then things would improve. My personal feeling is that Sony has to do something to increase the market penetration on this console and a price drop is a fine thing to start that ball rolling. Ideally this combined with a must have game, and you will see sales numbers increasing. Now the big question is "Will Microsoft adjust the Xbox 360 price as well?" Keep in mind that Microsoft is about to take it in the shorts for the quality issues that continue to plague them and while the extended warranties are nice for the consumers who own consoles - they do make it hard to drop the price on the ones in the channel.

Update: The cat is out of the bag and Sony has a press release that documents the new pricing on the PS3 and the addition of an 80gig PS3 priced at $500. Now I will save my whole discussion about crappy pricing policies by the console vendors when it comes to mass storage since I know anybody can go out and find a quality drive of much higher capacity for the money these vendors are asking. - Well I guess I won't save it after all..

As soon as I heard about the $1B I thought it seemed high. They haven't sold that many consoles yet to make that likely in my opinion. It seems they have budgetted enough for 1/3 of all 360's to need replacing. It does show consumers they are serious about quality and keeping the consumer happy.

Warranty costs definately hit the P&L for the XBOX business, so I agree they might be reluctant to lower the price.

As for Sony - I still think that Blu-Ray drive in there is a great move. As it becomes obvious that Blu-Ray will win out of HD-DVD, the console looks a lot more appealing. Just last week one of the non-gamers at my office mentioned they would by a PS3 rather than a stand-alone Blu-Ray player. That has to work in Sony's favor.

The real winner of the console wars so far has been the Wii. I can't believe they are still having availability issues 10 months after launch with just over 8 million consoles sold worldwide. Every console is sold at a profit too - no loss leader for Nintendo. That's just amazing. And for the record, I still think the name is dumb.

Posted by scottsh on Sunday July 08, 2007 at 12:38 AM

I would agree with you Scott - the Wii is definitely the winner in this round. It is still lacking that real blockbuster title though - I mean Zelda is fun and all but there is no breakout got-to-have hit game wise for the console. I guess it is the console itself that is the real winner here, and I saw that one blog claimed that Nintendo was selling Wiis at a ratio of 6 to 1 when compared with Sony - I will have to go research that one since that is a pretty significant margin.

Well either way, I hope that Sony gets its act together since competition is always good for the consumer. But that is just my opinion...

Posted by Tim on Sunday July 08, 2007 at 12:55 AM

I too saw that "6 to 1" headline. Here is what I have been able to find out.

In Japan in June, the Wii did outsell the PS3 6 to 1.

http://search.japantimes.co.jp/cgi-bin/nb20070703n2.html

A site called VGChartz, which purports to provide data on all the console and games sales, has some interesting data. Take a look at this graph that compares the console sales by aligning their launch dates. That's pretty compelling.

Posted by scottsh on Sunday July 08, 2007 at 11:23 AM

Here are my thoughts on the topic. I wrote this up prior to seeing this discussion (RTFB) but it seems relevant.

Watching E3 I heard that Sony will stop selling its 60 gig PS3 version as soon as they sell out. They aren't making anymore. The new 80 gig version will be offered at the original $599
price. Furthermore, they are not passing on any of the savings from the
Blu-ray component price drops or the omission of the PS2 embedded hardware.
That's right, don't forget that the 80 gig version uses PS2 emulation which is
not as compatible as the hardware implementation. Effectively Sony is giving
users not much of anything save for the incremental 20 gigs of HD space and the
pack-in game MotorStorm. Throw in the current offer of 5 Blu-ray movies (out
of a selection of 21) and you get the feeling that they are at least trying but
possibly still falling short of the mark.

Microsoft isn't doing much better on their hardware front. While the 360 is
proving to be quite a capable platform and Microsoft seems to be doing a lot of
things right with their online offerings, their inability to address the
hardware design issue plaguing their equipment is bringing doubt as to whether
the platform is worth the effort. No one wants to have to deal with returning
hardware, especially more than once. Furthermore, their ever expanding number
of SKU's is making it harder for gamers to chose an appropriate system.

Where does all of this leave Nintendo? They have one system you can buy with a
great pack-in game with no hardware issues. It's offered for a reasonable
price. So does that mean everyone should be buying a Nintendo? No, it
doesn't, and here's why: Nintendo still hasn't been able to appeal to the core
gamer as well as Sony and Microsoft have. What Nintendo desperately needs,
even if they don't see it yet, is a few games like God of War, Assasin's Creed,
or Gears of War. If Nintendo is unable to capture some portion of the core
gaming population, they risk becoming just the latest home gaming sensation
like Trivial Pursuit or Jenga. Those were great games for the whole family and
all your friends could join in without much ramp time. Yet these fell by the
wayside after the initial excitement passed and everyone had a chance to play
for themselves. Only with core gamers can a console get legs to bring in
revenue over an extended period of time. Nintendo will need these gamers to
make their lower powered console last more than a couple of years.

Now that Sony, Microsoft, and Nintendo have had a chance to give their E3
presentations, does anyone think one of them has a leg up on the others?

Posted by Dean on Saturday July 14, 2007 at 5:07 PM

Nintendo showed they have a great stable of first-party titles that appeal to the broadest audience. They have to be careful they don't get relegated to kids games though. And we shouldn't forget that the DS is outselling all other consoles/devices by something like 10 to 1.

Microsoft showed the best collection of capability and product coming out this year. There weren't too many exclusives, but I'm not sure that matters. I'm dissapointed they didn't lower the 360 price - it has been on the market for almost 2 years without a price drop which seems amazing to me.

Sony demonstrated that they are sticking with the notion that the 'low cost' platform is the PS2, with the PS3 being the platform that will live for the next 10 years. I think that's working out great for them - they are making lots of dollars off the PS2 today, but they have the new platform out there for developers to start working with.

Posted by scottsh on Sunday July 15, 2007 at 8:44 AM

I think there are a great number of misconceptions out there about the "core" gamer. They are early adopters and they do spend a fair amount of thier income on games, but one should not forget that if companies focus on a much broader audience then they will reap the rewards of that focus. Nintendo does not need a Gears of War they should continue to focus on games that are family friendly since that is what most folks who have kids want. Furthermore, I have seen a few folks that are a single console family, but I would be interested in seeing what the trend is for multiple gaming systems.

Posted by Tim on Sunday July 15, 2007 at 8:19 PM

Here is a NY Times article on this subject.

I believe there are a number of Wii owners, myself included, that purchased the Wii as our only console. This means that I want to see war games just as much as I want to see games like Wii Sports. I'm willing to accept lower-end graphics for the convenience of owning just one game system. What worries me is that game publishers will focus on the family fun games and eschew publishing traditional console games. Take for example NCAA 08 by EA. I'm a college football fanatic and I assumed that EA would support the Wii just as they support the other consoles. However, NCAA 08 is not shipping for the Wii and since EA has been completely quiet on the topic I'm assuming it never will. I know a number of other casual gamers who have the Wii as their single console as well so I do not believe I am alone on this.

As the aforementioned article points out, it is possible that my concerns are not well founded and that support for the Wii is growing to the extent that we'll see broader support for the platform in the future. I just hope that Nintendo and game publishers realize there are a large number of us that want the traditional games as well as the party/social games. Go figure, we want it all.

Posted by Dean on Tuesday July 17, 2007 at 1:12 PM